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Should your nonprofit outsource HR management?

March 1, 2017

If your not-for-profit has too much work and not enough staff to go around, consider outsourcing your human resources function. It could give your internal team more time to spend on other core duties, mission-driven programs and strategic plans.

Benefits and drawbacks

Labor-intensive responsibilities such as recruiting, training, benefits planning and administration, compliance monitoring, leave management, and performance reviews can all be outsourced. Transferring all or some of these responsibilities to the right outside party can vault your organization to a higher level of professionalism and efficiency in those areas.

The move also might result in improvements. For example, an HR specialist firm is likely to have more tools, contacts and time to spend recruiting new employees than your own organization has. But the primary draw for most nonprofits is reduced costs. So you’ll need to perform a cost-benefit analysis. Even if it costs more to outsource, you may decide that the extra dollars are worth paying to free up staff for other initiatives.

One of the biggest drawbacks to outsourcing is the loss of control. That’s why it’s important to think through the ramifications of handing off HR responsibilities. Certain tasks may require an understanding of your organization’s culture and history to be effective. Also consider the impact of letting go of any HR staffers you currently employ.

Preparing to launch

Be sure your board approves the decision to outsource and your attorney reviews any contracts with service providers. Your nonprofit also needs to have controls in place to monitor the quality of outsourcing arrangements.

We can help you assess whether to outsource, such as assisting with your cost-benefit analysis. If you decide to outsource, we can also provide advice on effectively monitoring the arrangement.

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